The Evolution of Ad Spend: Will Clicks Eventually Lose Their Appeal?

The age-old question of whether advertisers will eventually stop paying for clicks is a puzzling one. The traditional method of click-based pricing aligns with the lower funnel of marketing tactics, making it a standard practice for obtaining qualified site traffic. Will this model evolve in the face of emerging trends and measurement techniques?

Will Advertisers Eventually Stop Paying for Clicks?

The answer is likely no. Click-based pricing remains a robust method for advertisers to track the effectiveness of their campaigns. It is particularly well-suited for lower funnel marketing strategies where the goal is to drive immediate actions like purchases, sign-ups, or conversions. Marketers understand that clicks directly translate to user engagement and intention, making this model a reliable choice for many businesses.

However, the advertising ecosystem is rapidly evolving. Techniques such as cost per impression (CPM) have gained traction, especially in walled gardens like Facebook, Instagram, Pandora, and Pinterest. These platforms allow advertisers to pay for ad exposure rather than clicks, making it easier to measure reach and engagement.

Paying for Impressions (CPM)

Indeed, it is possible that more advertisers might shift towards CPM bidding. This model is particularly popular in branding campaigns, where the primary goal is to increase brand awareness and ensure that a large audience sees the ad. Companies like Procter Gamble, Coca-Cola, and others frequently use CPM bidding to reach their target audience across various platforms.

Google, one of the leaders in digital advertising, has made significant strides in incorporating CPM bidding into its display campaigns. The company's Pay Per Conversion (PPC) bidding model, although available, has stringent requirements for advertisers to qualify. Additionally, the Pay Per Install (PPI) model for mobile app campaigns has been in place for some time, indicating a shift towards more outcome-based metrics.

While these changes are happening, it remains to be seen whether Google will introduce a Pay Per Conversion (PPC) model for paid search advertising in the future. However, given the complexity and current effectiveness of the click-based model, it's unlikely that a complete shift away from clicks will occur anytime soon. The robust data collected through clicks provides a clear and measurable path to success.

The Future of Digital Advertising

In the in-app advertising world, the trend towards a broader set of metrics beyond clicks is already evident. For instance, mobile in-app video advertising campaigns prioritize metrics like impressions and user engagement. Advertisers are moving away from a singular focus on clicks to a more holistic approach that includes metrics such as average view order completion (AVOC), cost per completed video view (CPV), and quality scores.

Advertisers recognize that clicks are just one piece of the puzzle. In the context of a broader marketing strategy, the focus shifts to user acquisition, lifetime value (CLV), and overall brand reach. A mobile in-app video campaign, for example, is judged not only by the number of clicks but also by metrics like the number of video views, completion rates, and user engagement levels.

The Stability of Click-Based Pricing

Despite these evolving trends, it is highly unlikely that advertisers will abandon click-based pricing anytime soon. The model continues to deliver reliable and measurable results, making it a trusted choice for many businesses. The global digital advertising market is valued at billions of dollars, and it's unlikely that any significant portion of this revenue would be relinquished without substantial justification.

While the industry is advancing, the core principles of click-based pricing remain fundamental to understanding user behavior and campaign effectiveness. As digital advertising continues to evolve, it will be interesting to see how the balance between click-based and alternative models shifts in the coming years.